07 June 2011

Council recommendation on the National Reform Programme 2011 for Ireland

The agreed fiscal measures have been implemented, the 2010 fiscal target was met, and fiscal outturns in the first quarter of 2011 have also been in line with the programme targets.

Based on the assessment of the updated Stability Programme pursuant to Council Regulation (EC) No 1466/97, the Council is of the opinion that the macro-economic scenario underpinning the budgetary projections in the programme is plausible. The medium-term budgetary strategy of the programme is to bring the headline general government deficit below the 3 per cent of GDP reference value by the deadline foreseen in the Council Recommendation of 3 December 2010. The programme targets deficits of 10.0 per cent of GDP in 2011, 8.6 per cent in 2012, 7.2 per cent in 2013, 4.7 per cent in 2014 and 2.8 per cent by the end of the programme period in 2015. This path is underpinned by consolidation measures of 3.75 per cent of GDP implemented in the budget for 2011, and broad consolidation measures of 5.75 per cent of GDP in 2012-14 and a further unspecified consolidation effort of more than 1 per cent of GDP in 2015. The stability programme restates the medium-term objective (MTO) for the budgetary position of -0.5 per cent of GDP, which is not reached within the programme period. Ireland appears to be at high risk with regard to the long-term sustainability of public finances. Achieving sufficient primary surpluses over the medium-term and further reforming the Irish social security system is necessary to improve the sustainability of public finances.

Ireland has made a number of commitments under the Euro Plus Pact, which were submitted on 3 May 20112. These include concrete measures to foster competitiveness, including reforming wage-setting mechanisms, opening up certain Professional services to competition, strengthening research and innovation, reinforce financial stability, in particular crisis resolution mechanisms, and enhance public finance sustainability through a medium-term budget framework, reforming pensions and increasing the retirement age.

The Commission has assessed the Stability Programme and National Reform Programme, including the Euro Plus Pact commitments. It has taken into account not only their relevance for sustainable fiscal and socio-economic policy in Ireland but their conformity with EU rules and guidance, given the need to strengthen the overall economic governance of the European Union by providing EU level input into future national decisions. In this context, the Commission stresses the urgency of implementing the planned measures to comply with Council Decision 2011/77/EU.

Council recommendation

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